infoTECH News

[November 28, 2012]

Senate Approves Leahy Bill to Address Trade Secret Theft

Nov 28, 2012 (Congressional Documents and Publications/ContentWorks via COMTEX) --
Senate Approves Leahy Bill to Address Trade Secret Theft
WASHINGTON (Wednesday, November 28, 2012) -- The Senate late Tuesday approved legislation authored by Judiciary Committee Chairman Senator Patrick Leahy (D-Vt.) to address the theft of trade secrets. The bill, which passed the Senate unanimously Tuesday night, responds to a recent Second Circuit decision that cast doubt on the scope of the Economic Espionage Act (EEA) by narrowly interpreting the law. The legislation makes clear that the EEA protects all trade secrets related to a product or service used in interstate commerce, strengthening an important protection for American businesses.

"This clarifying legislation will help ensure that our federal criminal laws adequately address the theft of trade secrets," Leahy said. "It is a straightforward fix, but an important one, as we work to ensure that American firms can protect the products they work so hard to develop, so they can continue to grow and thrive. I urge the House to act promptly in the short time left in this session to pass this common sense remedy."
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Statement Of Senator Patrick Leahy (D-Vt.), Chairman, Senate Judiciary Committee, Theft of Trade Secrets Clarification Act of 2012, S. 3642 November 27, 2012
I am pleased that the Senate today has passed this simple, common sense legislation to clarify a provision of the Economic Espionage Act and thereby help protect American businesses and American jobs.

The Economic Espionage Act makes it a crime to, among other things, steal a trade secret knowing that the theft will hurt the owner. This is an important protection for American businesses, which often choose trade secret protection over other forms of intellectual property protection.

A recent decision of the Second Circuit in United States v. Aleynikov casts doubt on the reach of the statute. A jury in that case found the defendant guilty of stealing computer code from his employer. The court overturned the conviction, holding among other things that the trade secret did not meet the interstate commerce prong of the statute, even though the defendant had copied the stolen code from his office in New York to a server in Germany; downloaded the code to his home computer in New Jersey; then flew to his new job in Illinois with the stolen source code in his possession; and the code was used in interstate commerce.

The court held that the Economic Espionage Act provision applies only to trade secrets that are part of a product that is produced to be placed in interstate commerce. Because the company's proprietary software was neither placed in interstate commerce, nor produced to be placed in interstate commerce, the law did not apply--even though the stolen source code was part of a financial trading system that was used in interstate commerce every day.

The clarifying legislation that the Senate has passed today corrects the court's narrow reading to ensure that our federal criminal laws adequately address the theft of trade secrets related to a product or service used in interstate commerce. It is a straightforward fix, but an important one, as we work to ensure that American companies can protect the products they work so hard to develop, so they may continue to grow and thrive. I urge the House to act quickly to pass this common sense legislation.